estate planning

Estate planning is important for everyone who wants to protect their assets and ensure that their loved ones are taken care of after they pass on. More so for high-net-worth individuals whose estates are larger and more complex.

But to get things right, wealthy families often need the guidance of qualified professionals, which include RIAs.

In this guide, we’ll explore different estate planning strategies to make sure that your clients’ assets are protected and distributed according to their wishes. We’ll also go over the different factors to consider to avoid complications and costly mistakes.

Estate planning checklist for high-net-worth individuals

A well-constructed estate plan guarantees that heirs and beneficiaries receive assets the way your client intended them to. It also reduces the estate’s tax burden. But to create one, several factors must be accounted for.

Here’s a downloadable checklist. We’ll delve deeper into these strategies in the succeeding sections.

1. Asset inventory

A high-net-worth individual is generally defined as someone with at least $1 million in liquid assets, excluding their primary residence. Some institutions, however, further categorize wealthy individuals beyond this standard definition:

• very high-net-worth individuals (VHNWI) are those who have between $5 million and $30 million in liquid assets
• ultra-high-net-worth individuals (UHNWI) are those with at least $30 million in liquid assets

An HNWI’s estate consists of tangible and intangible assets. Here’s a breakdown of what comprises each category:

Tangible assets

These are physical assets that have monetary value, including:

• liquid assets such as cash, cash equivalents and other investments readily convertible to cash
• real estate, including vacation homes, rental properties, and other land holdings
• personal property like vehicles, jewelry, artwork, collectibles, and other valuable possessions

Intangible assets

These are non-physical assets that hold significant value and contribute to the individual's overall wealth. These include:

• intellectual property, such as patents, trademarks, and copyrights
• investments like stocks, bonds, and mutual funds
• retirement plans such as workplace 401(k) plans and individual retirement accounts
• checking and savings accounts and certificates of deposit
• life insurance policies and annuities
• business ownership
• digital assets like cryptocurrency, online accounts, digital collectibles, and other virtual holdings

2. Legal directives

Part of a solid estate planning strategy is establishing important legal directives. Among the core components of a strong estate plan are:

Trusts

A trust is a legal contract that allows an assigned person or trustee to hold property for your client who creates the trust, aka the grantor. Trusts are often created so that the beneficiaries, who can be individuals or institutions, can make use of the property sometime in the future. Clients can fund the trust with money, physical assets, or any item that is of value.

Trusts are also useful legal instruments for holding property when the beneficiaries are minor children who are still unfit to receive and handle their full inheritance. In such a situation, the property will stay in the trust (“be held in trust”) until the beneficiaries reach a certain age, usually the age of emancipation.

Another advantage of using a trust in estate planning: the property in a trust is distributed faster, since your client can avoid probate court.

There are different types of trusts, so be ready to recommend tax-advantaged trusts – such as an irrevocable life insurance trust – to your clients.

Common trust options

When it comes to high-net-worth estate planning, your client can choose from two of four commonly used types of trusts: 

• living trusts vs. testamentary trusts
• revocable vs. irrevocable trusts

Living trust vs. testamentary trust

Also known as the inter vivos trust, a living trust is designed to hold the property of the grantor before and after they pass away. A testamentary trust, meanwhile, is a type of trust that is created by a will, making it go into effect only after the grantor’s death.

The main difference between these two kinds of trusts is that a living trust is effective for as long as the grantor is alive. A testamentary trust only takes effect after the grantor dies.

Revocable trust vs. irrevocable trust

In a revocable living trust, the grantor keeps the right to modify, change, revoke, or terminate the trust altogether. An irrevocable trust, meanwhile, does not allow the grantor to make any changes to the trust, although some US states allow the trustee to transfer property. However, the trustee can only do so with the consent of all the beneficiaries, when applicable. 

A revocable trust turns into an irrevocable trust once the creator (your client) dies, as they can no longer make any changes or revoke the trust.  

Here’s an article on revocable vs. irrevocable trusts for more on these differences.

Since placing their assets can help their beneficiaries avoid the potentially lengthy and costly probate, your client may likely choose to use a trust. Talk to your client about which type of trust is best for their needs, their wishes for their assets, and their beneficiaries. 

Will

Also known as last will and testament, a will is an essential part of an estate plan. This legal document specifies:

• how assets should be distributed after the client’s death
• guardians for any minor children or family members with special needs
• the executor to manage the estate's administration, including gathering assets, paying debts, and distributing inheritances

Wills are often used alongside other estate planning strategies, including trusts, to manage wealth and potential tax implications.

Wills must go through probate, which is a public process. This means that the details of the will become part of the public record. Wills can also be superseded by beneficiary designations on certain assets such as life insurance policies and retirement accounts.

Power of attorney 

The power of attorney (POA) is the authority that your client gives to someone to make legal, financial, or medical decisions on their behalf. It is often seen as one of the most important documents in estate planning. 

A POA outlines your client’s wishes for their assets and medical treatment should they become mentally incapable and unable to relay their wishes. 

The person who is given the power of attorney by your client is their agent. Your client must identify their agent in a document that only takes effect once they are considered unable to act on their own. They may also grant someone a POA for a specific purpose, such as accessing accounts to pay medical bills.

Should your client become unable to manage their legal or financial affairs and have not designated an agent, a court may appoint one for them. Each state has its own laws on POAs, but the general types are:

• durable – your client’s agent is empowered to continue to act on your client’s behalf even when their situation changes. Changes can include becoming seriously ill and unable to make sound decisions. Durable POA can be a broad spectrum of authority or limited to a specific purpose

• limited – gives an agent the authority to make decisions for specific purposes or for a limited time

• financial – grants the agent authority to manage your client's financial affairs. This can be made effective immediately or in case of an event, such as contracting an incapacitating illness or even death

Living will

Also called medical directive or advanced healthcare directive, a living will is key in ensuring that your client’s medical wishes are followed if they become incapacitated. This legal document contains:

• the designated healthcare agent – the individual who will make medical decisions on your client’s behalf
• medical treatment preferences – the client’s specific wishes regarding life-sustaining treatment, pain management, and other medical interventions
• end-of-life care – the client’s preferences for palliative care, hospice care, or other end-of-life options

A living will can also include specific instructions related to medical care. State laws on living wills, however, can vary. So while most states recognize living wills, their validity isn’t guaranteed. To ensure that your client’s living will is enforceable, it’s best to work with an estate planning attorney who knows state-specific requirements.

Good end-of-life planning involves more than just the financial aspects of the estate. This article lists ways on dealing with the emotional aspects of estate planning.

3. Asset protection

Asset protection involves structuring your client’s assets to protect them from potential creditors, lawsuits, and other financial risks. This is also intended to minimize estate taxes and ensure a smooth transfer of wealth to heirs and beneficiaries.

This estate planning strategy requires an assessment of all assets to determine their potential exposure to legal claims and tax liabilities. You will play a key role in helping your high-net-worth clients understand which assets are vulnerable and which ones are protected under state laws.

Asset protection can involve several legal structures and strategies, including:

• trusts – an irrevocable trust allows your client to move assets out of their name legally, which can help shield them from lawsuits or creditors
• insurance – a life insurance policy provides liquidity to cover estate taxes or other debts; this eliminates the need for heirs to sell valuable assets
• legal entities – structuring a business as a limited liability company (LLC) helps separate personal assets from business liabilities

Learn more about building a strong estate planning strategy in this guide.

4. Tax planning

Tax planning is an important aspect of estate planning, especially for high-net-worth individuals, as estate taxes can significantly eat into their heirs’ inheritance.

 In 2025, federal estate tax is levied on individuals whose assets are worth $13.99 million or greater at the time of their death. Some states also charge an estate or inheritance tax on top of this.

However, there are several ways for your clients to minimize estate taxes, including:

Tax-advantaged gifts

Individuals can gift a certain amount each year without incurring gift or estate taxes. For 2025, the gift tax exemption is $19,000 per recipient, a $1,000 increase from last year.

Using trusts

Some types of trusts help reduce estate taxes:

• irrevocable life insurance trusts (ILITs) shield the death benefit from estate taxes by removing life insurance policy proceeds from the taxable estate
• grantor retained annuity trusts (GRATs) can help minimize gift and estate taxes by transferring assets to beneficiaries with potentially little or no gift tax liability
• family limited partnerships (FLPs) can be used to transfer ownership of assets, like businesses or real estate, at a discounted value, reducing the taxable estate
• generation-skipping trusts (GSTs) transfer assets from the grantor directly to their grandchildren, bypassing the children; in doing so, estate taxes that would apply if the assets were first passed to the next generation are avoided 

Charitable giving

Donating to qualified charities can reduce your client’s taxable estate and may provide income tax deductions.

Business succession planning

High-net-worth individuals with closely held businesses may face tax liabilities if they die before transferring their businesses. Strategic planning using trusts or other estate tools can help minimize these obligations.

Estate planning plays an important role in helping high-net-worth individuals protect and distribute their wealth, minimize taxes, and ensure their wishes are carried out. A strong plan prevents large estates from being subject to high taxes, lengthy probate processes, and potential family disputes.

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